By Tiernan Ray

Comcast (CMCSA) this morning said it will merge with Time Warner Cable (TWC) in a stock swap worth $158.82 per Time Warner Cable share, for a total consideration of $45.2 billion.

Time Warner Cable shares are up 11.69, or almost 9%, at $147, in early trading.

The companies would have $86.8 billion in combined revenue, $71.4 billion in debt, and a net debt-to-Ebitda level of 2.4 times, Comcast estimates. Time Warner Cable holders will own roughly 23% of the new company.

Each Time Warner Cable share will be exchanged for 2.875 Comcast shares.

The announcement confirmed speculation last night by CNBC’s David Faber. Faber this morning pointed out that the deal has no break-up fee in the event regulators reject it. Time Warner Cable has a 180-day shop process to see if it can get a better deal, setting up a 9- to 12-month period for the deal to be closed.

During a conference call a short while ago, Comcast executive vice president David Cohen took up the discussion of regulatory approval, and the fear the U.s. government might block the deal, saying the deal was “pro-consumer,” and that after the deal, the company would have the same share of “national MVPD market,” with the two companies aging less than 30% share.

“This is simply not a horizontal merger — Time Warner and Comcast do not currently compete in any zip code in America.” Cohen said that Comcast, because of conditions imposted by the government consent decree on its ownership of NBC-Universal, the combined companies would have to observe federal regulations guaranteeing open Internet access, even though such rules have been vacated by the D.C. Circuit.

When pressed on the regulatory concerns later in the call, Cohen said the deal “may sound scary” but that to realize that it has less than 30% of the multi-channel market place means it will not have a more stringent review than Comcast’s purchase of NBC.

And then, too, for any “vertical” concerns about the deal, “the government already has the consent decree in place,” said Cohen.

On the call, Roberts told the Street that Time Warner Cable was a unique asset, having access to some of the top markets in the country, such as New York. He said the combined companies would have access to 43 of the top 50 markets in the country.

“We see substantial operating synergies,” perhaps $1.5 billion annually, said Roberts, after three years from the close of the deal. Those cost synergies include a variety of elements, such as purchases of equipment and labor force training, but also on content costs.

He said the implied 6.7-times multiple of Ebitda that is implied by the transaction was very reasonable for such premier properties. The company expects there are also “revenue synergies” the two companies can achieve, without, however, modeling those. The companies can also save $400 million in capital expenditures, Comcast said.

Robert Marcus, CEO of Time Warner Cable, remarked that “this transaction seems very natural to me,” given a long-standing history of partnerships on different matters. He said that while it was “never easy” to cede control of a company, “but in this case, it just makes too much sense.

Time Warner Cable is suspending its share repurchase program while the deal goes through approvals, but it will continue to pay the dividend, said Marcus.

When one analyst asked Marcus why he hadn’t pushed for a cash component in the deal, Marcus replied that the deal fulfilled his sense of creating the most value for shareholders. “This combination is a truly special one,” he said. “We’re going to create tremendous value for Time Warner Cable shareholders going forward.”

Addressing the risks of a complex integration process, Roberts contended that such efforts at large integration are “a core competency” of Comcast.

Comcast is committed to repurchasing $3 billion of its stock this year, Roberts confirmed, out of a total of $7.5 billion in authorized repurchases. Roberts said Comcast plans to extend that authorization upon completion of the merger by an additional $10 billion in authorizations, which would give Comcast a total of nearly $15 billion worth of authorizations. But he said Comcast would wait until that time to decide how much in new buybacks it would actually conduct.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.